A decade ago, Tampa appraiser Ron Balseiro realized something disastrous was about to happen.
His letter carrier owned five rental houses. A teacher he knew had seven. All had been bought with borrowed money, and all could face foreclosure if tenants stopped paying and home values plunged, making it impossible to sell or refinance.
That's exactly what happened.
"They were able to keep their own houses, but they lost all the rest,'' Balseiro said. "To me, what caused a lot of the problems is that too many people were buying too many houses they couldn't afford.''
Today, Tampa Bay's housing market is looking much healthier. Tighter lending rules have eliminated the "liar'' and "no-doc'' loans that enabled thousands to buy houses without documenting their incomes. Those who do qualify for mortgage loans are enjoying historically low interest rates. Those who want to sell — especially in popular areas like South Tampa, Largo and parts of St. Petersburg — often have little trouble attracting buyers.
"The market has been good all over,'' said Balseiro, who has been appraising residential property throughout the Tampa Bay area for 44 years. "Things are back to where they were during the boom in some areas and if you're not completely back, you're close. I'd say there's not an area of Hillsborough and Pinellas that I still see having problems.''
But Balseiro and others keep a wary eye out for signs of future trouble.
The recession hit hardest in Florida and other states where the housing bubble grew particularly big. Recovery came slower.
So of special concern is anything that could hurt the current real estate market: soaring gas prices, a widespread natural or man-made disaster, a return to risky lending practices. Any of these could send home prices tumbling, halt new construction and throw hundreds of thousands out of work.
"The most volatile housing market in the United States is in California and No. 2 is Florida,'' said Edward Pinto, co-director of the International Center on Housing Risk at the American Enterprise Institute.
Tampa Bay's market peaked in June 2006, when the median home price was five times the area's median income, Pinto said. The market hit bottom in 2011, with prices dropping to 3.5 times that of median income.
In 2013, bay area prices began to strongly rebound and by the start of this year, they were 5 to 10 percent higher than warranted by "underlying economic fundamentals'' like job and income growth. That's according to Fitch Ratings, which monitors the nation's residential mortgage market.
So with bay area homes "slightly overvalued,'' as a Fitch analyst put it, are we facing another bubble?
"Yes,'' Pinto said. "However, we are still potentially years away from it popping.''
Some parts of Tampa Bay, though, are getting fairly frothy.
In late 2013, Angela Mitchell and her husband, Lawson, sold their home in St. Petersburg's Euclid-St. Paul area when she took a job in Las Vegas. Not liking Vegas, they moved back in April 2015 and rented a house, then began seriously searching for a place to buy a few months ago.
"We were amazed at how much everything had skyrocketed since we left,'' Mitchell said.
Hoping to be relatively close to downtown St. Petersburg again, they looked in areas like Historic Kenwood where sellers were asking $280,000 or more for two-bedroom, one-bath houses. They also found "obvious flippers out there taking what little inventory there is … and raising the price $60,000 or even more,'' Mitchell said.
The couple — she's an advertising copywriter, he's an art director — didn't want to borrow so much that they would be house rich and cash poor. Last Sunday, the day after it hit the market, they offered $170,000 — $1,000 above asking price — for a two-bedroom house with a pool in Disston Heights, about 15 minutes from downtown.
"We didn't want to lose it because it was one of the rare ones that wasn't overpriced,'' Mitchell said of the house, which also drew other offers. But there was a reason for the seemingly good price. A home inspection found "issues,'' she said, and the couple backed out of the deal.
Across the bay, Balseiro occasionally shakes his head in disbelief as he does appraisals.
"I'm still amazed sometimes at what people are paying to live on Davis Islands because 10 to 15 years ago it wasn't anything like this,'' he said of the waterfront neighborhood close to downtown Tampa. From January through August this year, 24 homes on Davis Islands sold for at least $1 million. That's 10 more than in the same period of 2006, at the peak of the boom.
Another veteran appraiser, David Teacher, marvels at the transformation in southern Hillsborough County, an area ravaged by the housing bust but now home to a giant Amazon distribution center and dozens of subdivisions. The kind of new homes that would have sold for under $200,000 a decade ago are now going for $300,000 or more.
"I still believe those prices are ridiculously high, but there is so much infrastructure going in,'' Teacher said. "Five years ago I'd say you're crazy to be there, but the roads are changing, there are two new Publix, (shopping) plazas being built, support facilities are being built so that's all reason for people to live there.''
Also seeing explosive growth is southern Pasco County with a big new outlet mall and hundreds of new homes and townhomes.
But the appeal of these areas might not always be as great. The value of suburban homes is especially vulnerable to fluctuations in gas prices. The tripling of prices between 2002 and 2007 contributed to the housing bust as buyers shunned locations far from urban centers.
"That's very important for places like Florida, Arizona and California that have long distances for commutes,'' said Pinto of the American Enterprise Institute. "Farther- away places appear to be more affordable. But if gas prices triple, your out-of-pocket costs go up and the value of your house goes down. You're getting hurt two ways.''
Suburban areas also tend to attract many first-time buyers because of the lower home prices. But, as Pinto notes, a majority of such buyers today have government-backed mortgages with loan-to-value ratios of 95 percent or higher. That means they start out with 5 percent or less equity in their homes — a potential problem if housing prices drop again and they need to sell or refinance.
"I don't like to see these loans get concentrated geographically,'' Pinto said. "Even if buyer X comes through okay, others won't fare so well. Foreclosures have an impact on an area if you have a bunch.''
For now, though, Tampa Bay's housing market continues to power along. Mike Cheezem, whose JMC Communities has developed numerous condo projects in Pinellas, sees "a lot of very positive trends'' in the bay area with the improving economy and the steady flow of people into west-central Florida.
"I think the pendulum is just starting to turn in favor of for-sale housing and turning a little away from multifamily rentals,'' Cheezem said. "More of your millennials and other people that are renting now are choosing to buy, and that's a very good thing that's evident in the tremendous strength in lower ranges of the market — anything under $500,000 is very much in demand.''
The demand for housing near downtown St. Petersburg — arguably the hottest market in the entire bay area — has helped projects like 801 Conway. Planned for a once-blighted area now known as the trendy Edge District, it had contracts on 23 of its 35 townhomes at prices starting in the high $200,000s within 90 days of the sales launch this spring.
Mindful of what happened to many condo projects during the last boom, the builder, Aspen Venture Group, is carefully screening buyers and requiring them to put down more than the typical 10 percent.
"We just want make sure we have contracts from people who really intended to close,'' said James Landers, Aspen's owner. "As a developer having been through cycles before, we want to be very attentive to that.''
As for anyone worried about another housing crash, Balseiro has some comforting words based on his own four decades of appraisal experience in Florida's boom-and-bust market. In 2007, as home values began to plunge, people would call him wanting to know if they should sell before things got even worse.
Recalls Balseiro: "I'd say, 'Do you have to sell? If you can afford the payment, stay there, it'll come back.' It has, and now people call me back and say, 'Thanks for the advice!' "
Contact Susan Taylor Martin at firstname.lastname@example.org or (727) 893-8642. Follow @susanskate